Welcome to the 104th edition of the Money Hacks Carnival! I couldn’t make up my mind on the theme so I went directly to the source of all light and knowledge – my wife. I ran a couple of my ideas by her and she offered a fun twist on one of them.

For this edition, the links to all of the selected articles (which are all great reads) either ask or answer one simple question: Have you ever? To kick things off, I’d like to quote one of my favorite movie lines, “HAVE YOU EVER danced with the devil in the pale moon light?” (1989 Batman starring Michael Keaton and Jack Nicholson)

Editor’s Choice

HAVE YOU EVER thought of Evaluating The Costs of a Longer Commute: When It’s Better to Just Suck It Up? Check out LenPenzo.Com for an excellent analysis.

HAVE YOU EVER wondered if you’d be better off investing in the currency of a country or in it’s stock market? Intelligent Speculator presents Single Country Investing – Equity or Currency? Surprising conclusion posted at Intelligent Speculator.

HAVE YOU EVER used a race car analogy to structure an investment strategy? Well,Gather Little by Little has Investing Baby Steps #2: Different Investing Strategies for Beginners Part 2.

HAVE YOU EVER realized that someone you trust, or should trust, isn’t actually bound to act in your best interest? Make sure you understand What Is a Fiduciary and Why Does It Matter? posted at Provident Planning.

“HAVE YOU EVER called your boyfriend or girlfriend by the wrong name?” – ESL Conversation Questions

Career

HAVE YOU EVER found yourself asking Who’s to Blame for College Financial Aid Shortfalls? Jason at Automatic Finances offers his two cents.

HAVE YOU EVER been in a situation where you want to help someone find a new job but aren’t sure How to Refer a Friend for a Job? Ben has a few ideas at Money Smart Life.

Debt & Credit

HAVE YOU EVER evaluated which Credit Crunch Spending Ideas to Keep? Find a few ideas at One Advice.

HAVE YOU EVER bought a prepaid credit or debit card? Maybe you should ask yourself Is Money Deposited on a Prepaid Credit Card Safe? Find the answer at Prepaidcards123.

“HAVE YOU EVER looked fear in the face and said I just don’t care?” – Pink, the singer

Frugality & Saving Money

HAVE YOU EVER justified the purchase of 10 garden gnomes, 6 plastic flamingos, and 5 decorative rocks just to show-up your neighbor? Well, Kyle C. offers a spin with Keeping up with the Joneses, In a Good Way posted at Suburban Dollar.

HAVE YOU EVER spent countless hours at a therapist recovering from post traumatic stress disorder resulting from childhood cross-country vacations? Tom says Save Money With Fractional RV Ownership posted at Canadian Finance Blog.

HAVE YOU EVER wrapped yourself in seran wrap (just seran wrap) and waited on the couch for your husband to come home from work? Maybe that will make The Top 10 Ways to Woo on Budget (or perhaps ever?) next year posted at Budgets are Sexy.

“Just tell me HAVE YOU EVER really, really, really every loved a woman?” – Bryan Adams

Investing

HAVE YOU EVER asked How to Open a Scottrade Brokerage Account Online? You can find the answer posted at The Dough Roller.

HAVE YOU EVER been angry with a teller or Personal Banker II? Or wondered why the II? Studenomics presentsCommon Bank Tricks To Watch Out For posted at studenomics.com.

HAVE YOU EVER known the RRSP Deadline – Limits & Options? Visit Ray at Financial Highway for more information on your Canadian retirement accounts.

HAVE YOU EVER found that you feel too much like the hare that thought he could beat the tortoise? Money Ningpresents some surprising findings in Steady and Consistency Can Win the Race.

HAVE YOU EVER left a delivery room and asked yourself, “What’s the Difference between Coverdell Education Savings Accounts vs. 529 College Savings Plans?“ Jeff Rose outlines in succinct detail the difference between the two accounts.

HAVE YOU EVER had to explain the difference between an ETF and an Index Fund? I have, about 526 times. How about just sending your friends and family to Why ETFs are So Much Better Than Mutual Funds and Stocks posted at ETF Base.

“Joey, HAVE YOU EVER been in a… in a Turkish prison?” – Captain Oveur, Airplane!

Taxes

HAVE YOU EVER considered using a Tax Advisor? If you aren’t sure if you should use an accountant, then you need to read Six Reasons to Consider Consulting a Tax Advisor posted at My Wealth Builder.

HAVE YOU EVER wondered if Animaniacs actually had deep political undertones and was an attempt to indoctrinate our children? Are you thinking the same thing I’m thinking? For real politics, read Winners and Losers Under Obama’s New Tax Plan posted at Darwin’s Finance.

HAVE YOU EVER been audited by the IRS? Help yourself avoid it by reading How To Organize Your Tax Paperworkposted at Quest For Four Pillars.

Other

HAVE YOU EVER sold out someone you loved just to make a few extra bucks? Maybe you can have both love and money. Read Love & Money: Does It Have to Be One or the Other? posted at Balance Junkie.

HAVE YOU EVER been frugal with your efforts to communicate with your spouse? Maybe you have and didn’t realize it. Read Can Money Un-Do Your Marriage? posted at Cash Flow Sherpas.

HAVE YOU EVER needed some outside help with money concerns in your relationship? I bet you can find at least 20 good ideas to help from the 101 Ways To Improve Your Marriage Money Relationship posted at Money Help For Christians.

Question: “HAVE YOU EVER read a book or watched a movie that made you cry?”
Answer: “The 6th Sense”
- Yahoo Answers

Thank you to everyone who participated in this week’s edition of the Money Hacks Carnival. Please take a moment to inform others of this resource by using any of the social sharing buttons below. I also invite you to subscribe to our RSS Feed for weekly updates on other relevant financial topics. Have a great day!

Are you aware that your investment strategy can end up with a social disorder? Do you currently need to put your investments on Ritalin? Here’s your fiscal check-up. Open wide…

Is your investment strategy ADHD?

Let’s begin the discussion with a great definition of what it means to be ADHD (from Wikipedia): “Attention-deficit hyperactivity disorder (ADHD) is a neurobehavioral developmental disorder. ADHD is primarily characterized by ‘the co-existence of attentional problems and hyperactivity, with each behavior occurring infrequently alone.’ While symptoms may appear to be innocent and merely annoying nuisances to observers, ‘if left untreated, the persistent and pervasive effects of ADHD symptoms can insidiously and severely interfere with one’s ability to get the most out of education, fulfill one’s potential in the workplace, establish and maintain interpersonal relationships, and maintain a generally positive sense of self.’ (emphasis added)”

So how can your investment strategy end up with a social disorder? Let’s evaluate each underlined section above.

1. Each behavior occurring infrequently alone – This is for those of you who don’t really have an investment strategy. You buy whatever “hot investment” your buddy tells you about while golfing. Or you sporadically contribute to your retirement accounts. In order to retire with enough money in savings, you need (1) a defined investment plan with frequent, planned contributions and then (2) you need to stick to your plan only making occasional improvements or thought out modifications.
2. Symptoms may appear to be innocent – So you like to play with part of your investments. I know individuals that find an adrenaline rush in short term investments. Have you ever calculated the amount of money you are losing to transaction fees and taxes? Have you seen the studies that show that frequent investment changes lead to lower returns? Or maybe you don’t play the market but you don’t think too much of skipping contributions to purchase something that you really don’t need. Or maybe you just don’t see a convincing reason to have a strategy. Don’t fall into these traps. Responsible adults make plans.
3. The persistent and pervasive effects of ADHD symptoms can insidiously and severely interfere with one’s ability – I’m not sure if I can say that any plainer. Though, let me give you an example. Let’s say that you decide to contribute $500 a month to your retirement accounts. However, you skip your contribution every December (have to buy all those presents). At the end of 30 years (invested at 12%), you will have $1,609,695 in the bank. If you had not skipped those contributions, then you would have $1,747,482 in the bank. A difference of $137,786 even though you only contributed $15,000 less! See my point? Having an ADHD investment strategy will insidiously and severely interfere with your ability to reach your goals!

Stop right now and think about your investing style? Do you need to put your investments on Ritalin?

Let’s read a bedtime story from Aesop.

There once was a speedy hare who bragged about how fast he could run. Tired of hearing him boast, Slow and Steady, the tortoise, challenged him to a race. All the animals in the forest gathered to watch. Hare ran down the road for a while and then paused to rest. He looked back at Slow and Steady and cried out, “How do you expect to win this race when you are walking along at your slow, slow pace?” Hare stretched himself out alongside the road and fell asleep, thinking, “There is plenty of time to relax.”

Slow and Steady walked and walked. He never, ever stopped until he came to the finish line. The animals who were watching cheered so loudly for Tortoise, they woke up Hare. Hare stretched and yawned and began to run again, but it was too late. Tortoise was over the line. The moral of the story is that “Slow and Steady won the race!”

So what does this have to do with your investment strategy? Well, Aesop is prescribing financial Ritalin. Again from Wikipedia, Ritalin “works by increasing the activity of the central nervous system. It produces such effects as increasing or maintaining alertness, combating fatigue, and improving attention. (emphasis added)” Outlined below is what I think Aesop would have us do with our investments.

1. Central nervous system – The tortoise was able to win the race because he maintained one objective in sight and had an unfailing winner’s attitude. We also need to go straight to the core. Write down what you expect your life to be like when you retire. Describe your relationships, financial status, living conditions, location, etc. That list is your one objective and you must have an unfailing winner’s attitude. The old adage, “Keep your eye on the ball,” will have more impact on your financial resolve than most any other approach.
2. Increasing or maintaining alertness – The hare decided that he wearied from his efforts and could therefore take a nap. You can’t take a financial nap! Keeping to your budget every month moves you one step closer to financial freedom. Making monthly contributions to your investment accounts moves you one step closer to retirement. In the words of Winston Churchill, “Never, never, never give up!”
3. Combating fatigue – Don’t try to run. Everything has its time and place. Establish a plan that outlines when you intend to retire, how much you need to retire, how much you need to invest monthly, and which investment vehicles and types will help you reach your goals. Then slowly but surely follow your plan. Just keep walking, don’t try to run and do everything at once. You just can’t do everything right now and don’t beat yourself up for it.
4. Improving attention – In many accounts of Aesop’s tale, the hare focuses on the fame and attention of the crowd. Conversely, the tortoise ignored the crowd and stuck to his plan. Don’t be sidetracked by the latest trends, need for huge returns, infomercials, pop star financial gurus, or anything else for that matter. Once you have a plan, stick to it.

Conclusion

Does your investment strategy need to be on Ritalin? Well, ask yourself, “Do I have a set contribution amount and schedule? Do I have a defined plan? Do I invest in hot investments? Do I day trade? Am I focused on the short term? Am I tackling too many financial goals at once that are confusing me?” Depending on how you answer those questions, you may need to start taking financial Ritalin by (1) focusing on your reasons for smart investing, (2) adhering to your plan, (3) taking one month at a time, and (4) ignoring the crowd.

P.S. I recognize the irony of me criticizing the hare and my blog is called RabbitFunds. Maybe I should have named it TortoiseFunds.

My wife and I learned this lesson the hard way. Some time ago, we had the opportunity to make an investment in a start-up company that was hoping to go public. After considerable deliberation and time, we decided to go ahead and invest an amount that we were comfortable losing (at least that’s what we thought at the time). The promise of a big payoff was just too good to pass up. Within months, the company went bankrupt and we lost everything that we had invested.

I wasn’t sure what to take away from this experience until I was listening to a Goldman Sachs investment banker during a lecture series on financial planning. He asked the audience midway through his lecture, “What is the number one thing that you should consider when making an investment?” A few dozen hands went up and one student responded, “The return.” To our surprise, our lecturer said, “No.” Everyone’s hand went down. After coaxing us for a few more minutes, someone finally ventured, “Liquidity.” Again to our surprise, our lecturer said, “Bingo, that’s it.” He went on to tell us of an investment that he and his wife had made in the movie The Other Side of Heaven and how they had lost everything. The real kicker was that as they realized that the investment was beginning to slip away, there was nothing they could do to recuperate any portion of their money.

At that moment, I realized that the lesson I needed to learn from our attempt at a small fortune was that we should not make investments where we had no means to recuperate our money even if it was at a loss. We have since added an additional rule to our investment guide – every investment must offer liquidity. The average family does not need to take on that much risk. Although the opportunity for gain may be large, the financial risk associated with non-liquid investments outweighs the potential return. Don’t let greed get the best of you or your money. Had the investment that we made had some option to sell our shares, then we could have minimized our loss. However since we could not sell or transfer our shares, we lost everything.

There are many factors to consider when making an investment and maybe liquidity isn’t the leading one. However, make sure that you have an out, even if that out means at a loss, before investing your hard earned money. If you have no out, then there is probably somewhere better to put your money.